An Inquiry into the Causes which Affect the Happiness of Nations: The comfort of the lower orders

Introduction: Classical Egalitarianism

“Those who protested against the egalitarian nature of Classical economics predicted that economic growth would be detrimental to the working class’s interests.”

In this column we look at a simpler distinction, that between rich and poor. In the Classical view, rich and poor were fundamentally the same in that each had the ability to follow his or her own self-interest. Being the porter’s equal, the philosopher’s presumption that his might be a better life, is simple vanity. This aspect of the Classical view is now such a commonplace that it requires historical research to convince modern economists that it was ever denied! And if the porter and the philosopher are to be treated with equal respect, then economic policy that improves the lot of the porter is to be valued in and of itself. And yet this belief was challenged as well by the critics of the Classics.

The comfort of the lower orders

Here is Adam Smith on economic growth, and the desirability of the attendant high wages that follow from it:

Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged. (1776, Bk I, ch.8 par. I.8.35)[emphasis added]1

Growth is a good thing because it increases the well-being of the majority, in their own judgment of well-being. The qualifying phrase is important here: observing former slaves freely choosing leisure over market activity, the critics of Classical political economy retorted that such a choice and the corresponding judgment on well-being were simply mistaken.

Here is T. R. Malthus’s reading of Smith which makes it clear that contemporaries regarded Smith as a majoritarian:

The professed object of Dr. Adam Smith’s inquiry, is, the nature and
causes of the wealth of nations. There is another inquiry,
however, perhaps still more interesting, which he occasionally
mixes with it; I mean an inquiry into the causes which affect the
happiness of nations, or the happiness and comfort of the lower
orders of society, which is the most numerous class in every
nation.2

We find this emphasis on the well-being of the majority in Harriet Martineau’s writings as well. Martineau, the most gifted popularizer of the Smith-Malthus tradition, contrasted the well-being associated with nineteenth century markets with that of a feudal past:

It is interesting to observe by what regulations all are temperately fed with wholesome food, instead of some being pampered above-stairs while others are starving below; how all are clad as becoming their several stations, instead of some being brilliant in jewels and purple and fine linen, while others are shivering in nakedness; how all have something, be it much or little, in purses… Such extremes as these are seldom or never to be met with under the same roof in the present day, when domestic economy is so much better understood than in the times when such sights were actually seen in rich men’s castles: but in the larger family,—the nation,—every one of these abuses still exists, and many more.3

Harriet Martineau’s Illustrations of Political Economy was such an overwhelming success that her portrait appeared in Fraser’s Magazine’s Gallery of Illustrious Literary Characters (see the picture to the right). She was reported not to admire the image—the discussion of her work was hostile—although at this distance it is hard to see why see would not. Perhaps the cat does not suggest authorial dignity?

Hierarchy as an alternative to Classical Economics

Carlyle’s hierarchicalism countered the two characteristics of Classical egalitarianism outlined above. Since the philosopher was the porter’s superior, his life served as a model for the lives of the lower ranks. Secondly, rejecting the equality of the porter and the philosopher, Carlyle pointed to the “palpable absurdity” of the majoritarian “count of heads.” Carlyle argued that the widening range of their choice, provided by either economic growth or political reform, degraded the lot of the working poor.

A similar position is argued by Ruskin in an attack on the economics of J. S. Mill. First, Mill’s equality is dangerous. What is needed, instead, is a guide to who should do what:

… if there be any one point insisted on throughout my works more frequently than another, that one point is the impossibility of Equality. My continual aim has been to show the eternal superiority of some men to others, sometimes even of man to all others; and to show also the advisability of appointing such persons or person to guide, to lead, or on occasion even to compel and subdue, their inferiors according to their own better knowledge and wiser will. My principles of Political Economy were all involved in a single phrase spoken three years ago at Manchester: “Soldiers of the Ploughshare as well as Soldiers of the Sword”: and they were all summed in a single sentence in the last volume of Modern Painters—“Government and co-operation are in all things the Laws of Life; Anarchy and competition the Laws of Death.” (Ruskin 1905, 17:74-5)

Ruskin, like Carlyle, also held that economic growth did not improve the lot of the majority, the working classes. It may have made them richer, but it did not improve their lot. Here, as an instance, is Ruskin’s description of railroad travel which he published in Fors Clavigera. In the old days, an English worker’s transportation was cheap and idyllic:

In old times, if a Coniston peasant had any business at Ulverstone, he walked to Ulverstone; spent nothing but shoe-leather on the road, drank at the streams, and if he spent a couple of batz when he got to Ulverstone, ‘it was the end of the world.’

Now, in the market economy, post-industrialization:

But now he would never think of doing such a thing! He first walks three miles in a contrary direction to a railroad-station, and then travels by railroad twenty-four miles to Ulverstone, paying two shillings fare. During the twenty-four miles transit, he is idle, dusty, stupid, and either more hot or cold than is pleasant to him. In either case he drinks beer at two or three of the stations, passes his time between them with anybody he can find, in talking without having anything to talk of; and such talk always becomes vicious. He arrives at Ulverstone, jaded, half-drunk, and otherwise demoralized, and three shillings, at least, poorer than in the morning. Of that sum a shilling has gone for beer, threepence to a railway shareholder, threepence in coals, and eighteen pence has been spent in employing strong men in the vile mechanical work of making and driving a machine, instead of his own legs to carry the drunken lout. The results, absolute loss and demoralization to the poor on all sides, and iniquitous gain to the rich. Fancy, if you saw the railway officials actually employed in carrying the countryman bodily on their backs to Ulverstone, what you would think of the business! and because they waste ever so much iron and fuel besides to do it, you think it a profitable one.4

If the English worker thinks he is now better off riding the train, his judgement ought not to be trusted.

Thus, those who protested against the egalitarian nature of Classical economics predicted that economic growth would be detrimental to working class’s interests as understood by those wiser than the workers themselves. Francis Galton challenged the heart of Classical economics when he denied that everyone could be trusted to decide when to marry or how many children to have. In particular, he argued that since the poor would fail to appreciate the need to reduce family size in periods of slow growth, the nation’s overall standard of living would fall:

The check to over-population mainly advocated by Malthus is a prudential delay in the time of marriage; but the practice of such a doctrine would assuredly be limited, and if limited it would be most prejudicial to the race, as I have pointed out in Hereditary Genius, but may be permitted to do so again. The doctrine would only be followed by the prudent and self-denying. Those whose race we especially want to have, would leave few descendants, while those whose race we especially want to be quit of, would crowd the vacant space with their progeny… The practical application of the doctrine of deferred marriage would therefore lead indirectly to most mischievous results, that were overlooked owing to the neglect considerations bearing on race.5

The other founder of eugenics, W. R. Greg (whom we have seen before),
predicted that institutional reform which yielded property rights to Irish
peasants would fail because the Irish couldn’t be trusted to participate in
markets:

‘Make them peasant-proprietors,’ says Mr. Mill. But Mr. Mill forgets that, till you change the character of the Irish cottier, peasant-proprietorship would work no miracles. He would fall behind the instalments of his purchase-money, and would be called upon to surrender his farm. He would often neglect it in idleness, ignorance, jollity and drink, get into debt, and have to sell his property to the newest owner of a great estate…. In two generations Ireland would again be England’s difficulty, come back upon her in an aggravated form.6

Like Greg, Ruskin claimed that until Political Economy focused on re-making economic man—making the Irish less “idiosyncratic”, as Greg would have it—economic growth or reform would only further degrade the well-being of the poor. (See the illustration to the right.) This was the fundamental quarrel which the “Victorian sages” had with the Classics. The Classics—as Ruskin expresses the matter—eschew remaking people and instead take people as they are:

We blanch cotton, strengthen steel, and refine sugar, and shape pottery; but to brighten, to strengthen, to refine, or to form a single living spirit, never enters into our estimate of advantages.7

In other words, what Ruskin wanted was control. Top-down control by the elite. This paternalism won the day, for some time, in economics, as economists called for all sorts of interventions to help the working poor make ‘sensible’ decisions about marriage, family formation, and intertemporal consumption. But while such views still survive among some strands of economics, this paternalism was self-consciously rejected in the 20th century when economists such as Gary Becker and George Stigler returned economics to its Classical roots. The result has been a return to a deep respect in the profession for choice and economic growth.